Financialization and consumption: an alternative account of rising consumer debt levels in Anglo-America

A diversity of opinions exists on the cause and consequences of rising debt levels in the United States and United Kingdom. Economists and government policy makers see rising debt levels as a natural outcome of lower inflation and nominal interest rates. In fact, growing debt levels are seen as contributing to a wealth effect in these economies, as borrowing more as induced asset price appreciation contributing to new avenues of wealth creation. Conversely, some see rising debt levels as a symptom of eroding of self-control and evidence of the intensification of consumerism in Anglo-American society, as people are now considered to consume without consideration for the limits of income. Increasing indebtedness has also been associated with the deepening disciplinary power of global financein everyday life. This article addresses previous unexplored socio-cultural variables alongside significant market transformations that, together, contributed to escalating levels of consumer debt levels in Anglo-America. In doing so, it asks: what factors contributed to rising consumer debt levels in Anglo-America since the mid-1990s? Rather than putting forward a single causal relationship, rising debt levels are analyzed as a product of the cumulativeeffects of economic changes and socio-cultural factors. In particular, how widespread use of asset-backed securitization (ABS) in consumer credit industry created an increase supply of credit available for lending and a dependence on a growing pool of revolving debtors.Moreover, how stagnant incomes for wage-earners created a new form demand for consumer credit. Finally, how the centrality of consumerism in Anglo-American society provided sufficient cultural justification for consumption despite lower incomes for most wage-earners.